In this article, we decided to focus on 10 common mistakes that can expose your company to potential legal liability:
- Using a “one-size fits all” approach. It’s tempting to use a handbook template you find online as your own. It may be okay to use one as a place to start, but you should not rely on a template when drafting a handbook. Each business is unique with different policies and workforces, not to mention each may be subject to different state and federal laws. For example, federal contractors have to take into consideration the requirements of Federal Acquisition Regulations and employers that have less than 50 employees may not be subject to certain legal requirements like the Family and Medical Leave Act. Including policies that may not be applicable to the company could subject the company to an obligation to follow the policy.
- Failing to use language your workforce will understand. Because legal violations can translate into substantial liability, there is a tendency to include every law relating to employment in the handbook. This results in handbooks that are extremely long and difficult to understand. Make sure that you understand when it is necessary to include certain legal requirements and when it is not. For example, consider whether you really need separate policies for each state or whether company policy already covers the requirements of the states in which you operate. Most importantly, make sure you put the policy in terms the employees will understand and should not just regurgitate the law. The main goal of a handbook should be to give employees practical guidance on their employment, not to recite the law. Make sure the policy communicates the components that are critical for your employees to understand the law and what they need to do to avail themselves of the policy.
- Including contract-like language or omitting an at-will statement. The law of most jurisdictions in the United States is that employees can be terminated without cause or notice as long as there is no contract of employment for a specific duration of time. In only specific circumstances can this presumption be overcome. These circumstances may include when the employee’s at-will status is not communicated or when the handbook language creates an implied employment contract. Make sure that the handbook includes a separate at-will statement and that the handbook is clear that it is not a contract of employment. Additionally, make sure your policies do not appear to create contractual obligations. Agreements like confidentiality or noncompete agreements that hold employees legally accountable should be signed separate and apart from the handbook.
- Including overly-detailed policies and definitive statements. A handbook needs to give employees guidance, but it should not be overly detailed or be a guide for supervisors. What do we mean by this? Take a discipline policy, for example. While it is good to give employees an idea of the company’s approach to discipline, it should not definitely state that the company will always follow certain steps in progressive discipline. An overly detailed or definitive policy such as this can complicate situations where termination (or skipping a step) is immediately warranted. It could even threaten the employee’s at-will status. Likewise, the handbook should generally avoid statements such as “a supervisor will…” or “every January the Company conducts employee evaluations.” Those statements are often used against companies in litigation and investigations.
- Failing to consider the National Labor Relations Act (NLRA). Many employers forget that the NLRA applies to both union and non-union workforces. In recent years, the National Labor Relations Board has taken an aggressive approach to employer policies that it has determined might restrain an employee’s right to engage in activity that implicates terms or conditions of employment. Among the many policies that have come under attack are social media, confidentiality, employee conduct and media contact. For example, you cannot require that employees refrain from talking to the media about their employment, maintain a blanket prohibition on employee conduct that disparages a supervisor or the company or prohibit employees from discussing their wages. Additionally, simply stating that the policies are not intended to violate the NRLA is not acceptable. However, with careful drafting, it is possible to maintain similar policies that are not overly broad and do not implicate the NLRA.
- Facially unlawful policies. Employment laws are confusing and often we find policies that are just legally incorrect. We often see this with payroll deduction policies that are subject to state law and the Fair Labor Standards Act. For example, there are very specific rules for deducting pay from an exempt employee’s salary. Additionally, some overtime policies communicate that overtime is not allowed and insinuate that employees should not record the time. While you should ensure employees get authorization for overtime, you must pay them for all time worked. Often companies audited by the Department of Labor are surprised to learn that employees were working overtime and did not report it. It is critical that you have an attorney review these policies and include strict reporting requirements that employees must follow if they learn of a violation.
- Failing to be on the offensive. Often companies are so concerned about playing defense against possible claims, they forget there are many aspects to handbooks that can help prevent claims. Consider whether your policies should be broader than applicable law and include a well-crafted policy regarding reporting concerns about legal violations and employee grievances. It is also critical to train supervisors regarding their legal obligations, management practices and how best to handle employee complaints. Supervisor interaction with employees is often the reason complaints are waged.
- Putting a cap on medical leave. The intersection between workers compensation laws, the Family and Medical Leave Act and the Americans with Disabilities Act is often compared to the Bermuda triangle. It is very easy to run afoul of the requirements. We often see policies that attempt to cap medical leave at the amount allowed by the Family and Medical Leave Act. However, while there may be a limit to protected leave under that law, don’t forget that the Americans with Disabilities Act and many workers compensation statutes do not provide for a cap and each situation must be independently assessed.
- Failing to get a signed employee acknowledgement form. In the hustle of onboarding or in redistributing revised handbooks, it is common for the handbook acknowledgement form to get lost in the shuffle. However, this is often the only evidence that an employee attested to reading and understanding the handbook. It is critical that your staff double check there is a form on file for every employee, even the most senior employees.
- Not engaging a labor and employment attorney to review the handbook regularly. We know this one might seem self-serving, but it really is important. While it doesn’t have to be our firm, but it should be an attorney who is familiar with your industry or otherwise is well-versed with changes in the law. Employment laws at the federal and state levels change frequently and some of these changes are required to be reflected in your company’s handbook. Make sure you update the handbook on a regular basis and hire a well-informed attorney to assess the language and help you fend off legal challenges.
About the author: Nichole Atallah is an associate with PilieroMazza in the Labor and Employment Group. She may be reached at firstname.lastname@example.org.